Facial Recognition Moratorium: How Proposed Legislation Could Impact AI in Security, Real Estate, and Proptech
The Facial Recognition and Biometric Technology Moratorium Act could reshape AI-driven security innovations, affecting sectors like multifamily housing, logistics, and venture capital funding for facial recognition technology.
The Facial Recognition and Biometric Technology Moratorium Act seeks to halt federal use of facial recognition technology until regulations are in place, potentially slowing its adoption in private sectors like real estate and logistics.
CAGR for facial recognition: The global facial recognition market is expected to grow at a 16.3% CAGR from 2021 to 2028, reaching $13.4 billion by 2028.
VC funding in cybersecurity: Venture capital funding in the broader cybersecurity sector reached $29.5 billion in 2021, though it dipped to $18.5 billion in 2022 due to regulatory and market concerns.
Facial recognition technology has become a cornerstone of AI-driven innovation in industries such as security, logistics, and multifamily. However, a proposed piece of legislation known as the Facial Recognition and Biometric Technology Moratorium Act aims to limit the use of facial recognition technologies by federal agencies until comprehensive regulations are in place. This moratorium could have far-reaching implications across various sectors that rely on biometric data for security and identity verification. With the growing scrutiny around privacy, the Moratorium Act has raised concerns over the future of AI-driven solutions in real estate, logistics, and beyond.
Legislative Restrictions on Facial Recognition Technology
The Facial Recognition and Biometric Technology Moratorium Act is designed by federal agencies to curb the use of facial recognition technology, citing concerns about privacy, racial bias, and wrongful identification. If passed, this law would effectively pause the deployment of facial recognition tools in government agencies until proper regulations are enacted. However, this legislative move could also impact the private sector, particularly in industries like real estate and logistics, where biometric technologies are increasingly used to enhance security. Multifamily properties, for example, have started using facial recognition for secure building access, while logistics firms employ biometric systems for driver verification and access control in warehouses. This potential legislative barrier could stall the broader adoption of these AI tools, pushing companies to explore alternatives or delay planned deployments.
Impact on Security and Adoption in Housing and Logistics
The potential slowdown in the deployment of AI-driven security tools could be particularly detrimental to sectors that rely on facial recognition for automation and security. In the multifamily and commercial real estate industry, AI-powered security systems help property owners manage tenant safety and control access to buildings. Likewise, in the logistics industry, biometric verification is used to manage fleet operations and ensure secure access to facilities. According to data from Research and Markets and additional research by CRETI (Center for Real Estate Technology & Innovation), the facial recognition market is projected to grow from $3.8 billion in 2020 to an estimated $6.3 billion by 2023—representing a 65% growth in just three years. This legislation could significantly curb the adoption trajectory of such technologies. The Moratorium Act, if enacted, may force companies in these sectors to pause investments in facial recognition and explore alternative technologies, resulting in delayed innovation and higher costs for implementing less sophisticated security systems.
Venture Capital Funding and the Regulatory Impact on Investment
Despite regulatory uncertainties, venture capital funding for facial recognition and biometric technology has been substantial. According to data from Crunchbase and CRETI, from 2019 to 2021, VC investments in facial recognition surged as companies like SenseTime and AnyVision raised significant capital. In 2019, global cybersecurity VC funding reached $7.8 billion, with investments growing 59% to $12.4 billion in 2020. Facial recognition technologies saw similar growth, with the market valued at $3.8 billion in 2020 and growing to $5.0 billion in 2021, a 32% increase.
However, by 2022, facial recognition funding slowed amid rising concerns about privacy and potential regulatory crackdowns. While the overall market for facial recognition reached $5.15 billion in 2022, VC funding in the broader cybersecurity space also dipped by 37%, totaling $18.5 billion, down from $29.5 billion in 2021. The Moratorium Act, if passed, could exacerbate this trend, making investors more cautious about allocating funds to biometric technologies, especially facial recognition, where regulatory frameworks remain uncertain.
What This Means for Proptech
The proptech sector, which has embraced facial recognition for enhanced security and tenant management, could see delays in the deployment of AI-driven tools if the Moratorium Act is passed. Many property owners and managers are already integrating facial recognition into smart building systems to improve security and offer seamless tenant access. However, regulatory uncertainty could force them to reconsider these investments, pushing them toward less advanced technologies like keycard systems or fingerprint scanners. This delay could slow down the progress of smart building development and reduce the industry's ability to leverage AI for security enhancements.
Final Thoughts
The Facial Recognition and Biometric Technology Moratorium Act introduces significant challenges for AI-driven security technologies, particularly in sectors like multifamily housing and logistics. While the proposed legislation aims to address critical privacy and bias concerns, it could also slow innovation in facial recognition and biometric tools, forcing companies to rethink their adoption strategies. Additionally, venture capital funding, which has been a key driver in the growth of facial recognition technology, may shift as investors become more cautious amid regulatory uncertainty. As the future of AI-driven security remains in flux, industries dependent on these technologies will need to closely monitor legislative developments to ensure they remain compliant while continuing to innovate.
